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'Brave' NSW Planning Minister breaks ranks on negative gearing

Friday, 25 Nov 2016 05:21:15 | Lucy McNally

NSW Planning Minister Rob Stokes (L) is delivering a speech arguing against negative gearing today. (ABC News: Sarah Gerathy)

New South Wales Planning Minister Rob Stokes has broken ranks with his federal Liberal Party colleagues on the issue of negative gearing, arguing the rules should change to help ease Sydney's housing affordability crisis.

Prime Minister Malcolm Turnbull ruled out changes to negative gearing during the election, and last month Treasurer Scott Morrison pressured the states by arguing they needed to release more land to boost supply.

But Mr Stokes said it made no sense that people were getting tax breaks on multi-million-dollar homes they own as investments, while others were struggling to get into the market.

He is scheduled to give a speech today to the Committee for Economic Development in which he says, while the Government welcomes investment in NSW, his primary focus is making sure Sydney families can enter the housing market.

Mr Stokes said supply alone would not solve the city's housing affordability problem.

"Earlier this year the NSW Government was ready, willing and able to have a discussion about tax. Disappointingly our leadership on this issue fell victim to the Canberra culture that promotes opposition over consensus," he says in the drafted speech.

"It's a major concern to me as Planning Minister of the most populous state, but also as a dad to three young children, of increasing reports that without parental support the dream of home ownership is becoming harder and harder to obtain.

"Surely the focus of the tax system should be directed towards the type of housing we need. Why should you get a tax deduction on the ownership of a multi-million-dollar holiday home that does nothing to improve supply where it's needed?

"We should promote investment in the type of housing that is needed to by the burgeoning populations in cities like Sydney."

Mr Stokes said Governments across the board need housing policies which "focus on equality of opportunity".

Tim Williams, chief executive for the Committee for Sydney, called the Minister "brave" for speaking out against his Coalition colleagues.

"This is a national emergency in many respects," he said.

"First homebuyers have collapsed to 6 per cent of the total market in Sydney — it was double that 20 years ago.

"It's entirely because of the tax incentives for home owners who have multiple homes that are squeezing poorer people out at auction."

'Negative gearing would only improve prices by 0.5pc'

Glenn Byres from the NSW Property Council said this debate was settled at the federal election.

"Even the proponents of changes to negative gearing can only argue through their own modelling that it'll deliver a 0.5 per cent change to housing prices," he said.

"NSW has stamp duty which adds $35,000 to $40,000 to the cost of a new home and they have the highest infrastructure charges that get built into the cost of a new home in the country."

Mr Williams dismissed Mr Byres' comments.

"I don't think that modelling is correct and you've got to understand this — we've doubled housing supply in Sydney in the last four years and the price has gone up 30 per cent," he said.

"Rob Stokes is absolutely right — there is no way of bringing house prices down just by increasing housing supply," he said.

Federal Minister for Revenue and Financial Services Kelly O'Dwyer said supply was the solution to the housing affordability problem, not removing negative gearing.

"The majority of Australians who use negative gearing have got an after tax income of $80,000 or less," Ms O'Dwyer told Channel Nine.

"The Labor Party wants to pretend that this is somehow the simplistic solution to fixing the housing affordability problem. Unfortunately, it isn't.

"It's got a lot to do with supply and demand and the truth is we're just not building enough houses to meet up with the demand that is there."

Labor vindicated: Labor

The NSW Shadow Treasurer Ryan Park said Labor has been vindicated.

"Rob Stokes has admitted that NSW Labor and federal Labor are right in wanting to look at taxation, at other incentives to make housing affordable for future generations again," he said.

Labor frontbencher Anthony Albanese said the Liberals should listen to Mr Stokes.

"We have here the most senior Liberal Planning Minister in the country, Rob Stokes, spelling the cat on an issue that Australians know is an issue for their kids and their grandkids," he told The Today Show.

"We are in danger of developing a society whereby some people are able to buy their sixth, seventh, eighth home, but people trying to get into the housing market to buy their first home simply aren't able to."

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